Ooyala Global Video Index Q1 2016 .pdf

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Title: Ooyala Global Video Index Q4 2015
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GLOBAL
VIDEO
INDEX
Q1 2016



2

OOYALA GLOBAL VIDEO INDEX Q1 2016

TABLE OF CONTENTS
POINT OF VIEW······································································································· 4
HOW OTT BUSINESS MODELS COMPARE: SVOD VS. AVOD················6
VIEWING PATTERNS BY TIME OF DAY, DAY OF WEEK··························· 10
VIDEO ADVERTISING TRENDS········································································ 12
ENGAGEMENT TRENDS······················································································14
HOW DISCOVERY HELPS KEEP VIEWERS ENGAGED····························· 16
HOW QOE IMPACTS ENGAGEMENT······························································18
TABLET AND SMARTPHONE VIDEO TRENDS·········································· 22
SPOTLIGHT ON LATIN AMERICA··································································· 24
ABOUT OOYALA’S GLOBAL VIDEO INDEX·················································27



OOYALA GLOBAL VIDEO INDEX Q1 2016 3



POINT OF VIEW

JIM O’NEILL, PRINCIPAL ANALYST & VIDEOMIND EDITOR
The OTT Boom has arrived.

What should we expect next?

One year ago, FCC Chairman Tom Wheeler was
nearly booed off the NAB Show stage when
he challenged broadcasters to embrace OTT.
Broadcasters had other ideas.

More.

What a difference a year makes.
The first four months of the year were rife with
new OTT plays launching — and rumors of
many more to come. Netflix, the 500-pound
gorilla in the market, in January launched in 130
new territories, creating a “global Internet TV
network” that spurred competition and content
production around the world, especially in Asia.

The second half of 2016 will see a run on the
OTT market unlike any we’ve seen before.
There will be winners and there will be losers.
Not every new service is destined for success,
but the players are now out in force.
In Ooyala’s Q1 2016 Video Index, we look at
the numbers ― and see that the OTT boom is
tied to several other trends in viewing habits.
Trends like these:
♦♦

Viewers are demanding more quality.
Data shows that viewers are less tolerant
than ever of quality problems. They’re more
forgiving on live streams, but buffering and
slow join times on VOD lead to drop-offs
of 40% or more. Viewers also remain a bit
impatient in general: shorter video is still
watched to completion more often than
longer video on all devices.

♦♦

After a long flatline, tablets are gaining
traction, particularly during the day.
In the evenings it’s all about mobile with
tablets, likely driven by viewing of SVOD
content and second-screen applications.
But a closer look at the data shows that
workday video starts on tablets and mobile
devices are now gaining ground on PCs.
It’s part of a gradual evolution that has seen
mobile devices become more ubiquitous in
the workplace than traditional workstations.
Nearly one in five (18%) of all mobile views
are now on tablets, the third consecutive
quarter of growth.

Among APAC service providers that ramped up:
PCCW expanded its freemium OTT play in Asia;
SingTel pushed SVOD service Hooq; iFlix
accelerated its own regional expansion, and
NBCUniversal readied “Hayu,” offering a variety
of content in Australia (and Ireland).
In the United States, Hulu announced its plan
for a virtual MSO in 2017; a new Sling TV that
includes Fox (but loses ESPN) is moving toward
1 million subscribers; a new OTT service is
arriving from Starz; and AT&T has announced
plans to create a virtual MSO to run much
of its premium content with an aggressive
focus on younger viewers. We heard rumors
that YouTube planned a virtual MVPD play
in addition to its YouTube Red SVOD service
(which also was expanded into Latin America).
And, of course, social media sites played
a growing role. Twitter cut a deal for NFL
Thursday Night Football and Facebook
continued its pursuit of all things video.
It exceeded 100 million hours of streamed
video daily in Q4, and just weeks into Q2
launched (with Ooyala as a media solutions
partner) “Facebook Live.” The new service
allows broadcasters and video publishers
to quickly and simply syndicate their official
broadcasts to Facebook.

4

OOYALA GLOBAL VIDEO INDEX Q1 2016

♦♦

Ad reinsertion is saving publishers
millions. The ad-blocking battle continues,
and it remains a growing threat to
publishers and broadcasters who stand
to lose as much as $27 billion in potential
ad revenue by 2021. But! Ad reinsertion
technology is taking the battle to the ad
blockers, boosting ad impressions by as
much as 23%. That’s earning big publishers
millions every year.

♦♦

Business models remain a challenge.
Will subscription (SVOD), ad-supported
(AVOD) or hybrid models win? Or will there
be a more widely-accepted hybrid model
like HBO’s — which offers operator-based
subscriptions, TV Everywhere bonuses
(HBO Go), and a direct-to-consumer play in
HBO Now? So far, the numbers don’t show
a clear winner.

♦♦

Mobile is driving Latin America. In our
special Q1 spotlight on Latin America, we
dig into the numbers for the Latin America
market and see that they still vary widely
by country due to infrastructure and
content. But mobile is taking center stage
everywhere in LatAm; by 2020 it will be
the world’s second-largest smartphone
market (behind Asia Pacific) with more than
605 million smartphones.

One thing is certain, OTT or not: content
viewing is more fragmented across devices
than ever before. Competition for audiences
is intensifying. And viewers are increasingly
insisting on exactly what they want — from
whichever provider will give it to them.
Read on for the numbers.



OOYALA GLOBAL VIDEO INDEX Q1 2016 5



HOW OTT BUSINESS
MODELS COMPARE:
SVOD VS. AVOD

6

OOYALA GLOBAL VIDEO INDEX Q1 2016

How to monetize online video remains a hot
question, primarily because it’s one that has so
many potential answers. Maximizing revenue
is top of mind for most video providers,
regardless of their business model. However,
sometimes “which business model to choose?”
is the first question. There are numerous
approaches to maximizing ROI for subscription
(SVOD) services, getting ad loads right for adsupported (AVOD) services, and driving traction
with various iterations of transactional (TVOD)
or “freemium” (FVOD) services.

SVOD VS. AVOD:
VIEWING PATTERNS BY DEVICE

This quarter, we looked at how consumption
of AVOD and SVOD assets differ. We looked
at what kind of content is engaged with more
on various devices, how content length affects
engagement, and what those consumption habits
mean for ad monetization.

Those patterns indicate that watching premium
content delivered via subscription services may
be an experience that’s more personal and as
such, more broadly viewed on personal devices.

Overall, smartphones and mobile devices were
used slightly more than PCs to watch SVOD
content. Combined, smartphones (44%) and
tablets (11%) made up more than half (55%) of
all SVOD views.
When it came to AVOD viewing, the opposite
was true: PCs got 55% of video views,
smartphones 39% and tablets just 6%.

60%

30%

0%
PC

PHONE

TABLET

SVOD AND AVOD:
SHARE OF TIME WATCHED
Q1 2016

SVOD
AVOD



OOYALA GLOBAL VIDEO INDEX Q1 2016 7



HOW OTT
BUSINESS
MODELS
COMPARE:
SVOD VS. AVOD

SVOD VS. AVOD:
SHARE OF TIME WATCHED
SVOD content is, by and large, long-form
(20 minutes or more). Measure its share of time
watched on devices and it makes up the vast
majority of the pie.
On smartphones, tablets, PCs and connected TVs,
long-form’s share of SVOD viewing time ranges
from 97.7% for smartphones to 99.9% for
connected TVs.
The spread of time watched for AVOD content
is far more complex, although it still follows the
basic credo of “bigger screens are better.”
AVOD’s share of time watched varies greatly
by device:

SHORT-FORM
(0–5 MINUTES)
MID-FORM
(5–20 MINUTES)

CONNECTED TV
4%
4%
92%

LONG-FORM
(20 MINUTES OR MORE)

TABLET
44%
13%
43%

PHONE
66%
16%
18%

PC
55%
15%
29%

8

OOYALA GLOBAL VIDEO INDEX Q1 2016

THE BOTTOM LINE
Consumption of premium content continues
to grow on all devices and for all forms: short,
medium and long.
As to a “winner” between AVOD and SVOD:
who is the clear king of ROI? That’s a battle still
being waged and, frankly, there’s no clear leader.
The immediate solution for content owners is
one that’s becoming more common: a hybrid
model that includes SVOD, AVOD and even
TVOD content to reach as many potential
customers in as many ways as possible.
Among other considerations to weigh when
deciding on funding models: Catalogue size,
content type and consumers’ willingness to
subscribe, and even how consumers can pay.
In North America and Europe, for example,
credit cards are de rigeuer. But in emerging
markets like Latin America and Asia a better
approach might be partnering with an ISP that
has established customer relationships.



OOYALA GLOBAL VIDEO INDEX Q1 2016 9


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